One-glance verdict
Within fair range
$105.99 our estimate vs market $76.11
Wall Street consensus: $85.40 (-19.4% lower than our fair-value estimate)
28% below our estimate
Fundamentals snapshot
Digi International Inc.
DGII · NMS · Technology · Communication Equipment
Current price
$76.11
52-week range
$34.41 - $86.84
Market cap
$2.89B
Balance sheet
Healthy
8.91x Adequate
Net debt $90.42M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 17.7% last year.
- Reward Returns 7.5% on equity, ahead of 40% of its peers.
- Reward Free cash flow was positive in 9/10 years.
- Risk Stock trades 31.9% above its 5-year average P/E.
What this company does
Digi International Inc.
Digi International sells the hardware and software that connects industrial equipment to the internet, a concept called the "Internet of Things." The company makes money selling physical devices like routers and sensors, but also earns recurring revenue (predictable income from subscriptions) for software that lets customers manage their equipment from afar. This is important because their technology helps industries like healthcare and food service monitor critical systems, making their supply chains (the entire process of making and selling goods) safer and more efficient.
How the company got here
Started in 1985, Digi International originally made special hardware that allowed personal computers to connect to multiple devices at once. As the internet became more popular in the late 1990s, the company shifted its focus to connecting devices to the web for industrial and business uses. Over the years, Digi has grown by purchasing other technology companies to expand its capabilities. This has transformed it from a company that just sold hardware into one that provides complete systems for what is now called the Internet of Things (IoT).
What it actually does
Digi International helps businesses connect their electronic equipment to the internet so they can be monitored, controlled, and managed from a distance. This is often called the Internet of Things, or IoT. For example, their technology can be used to check the temperature of refrigerated food in a grocery store, manage traffic lights in a city, or allow a company to securely access and control equipment in a remote data center. They provide the hardware, software, and services to make these connections reliable and secure.
IoT Products & Services
This is Digi's largest business segment, making up the majority of its sales. It sells the physical hardware that allows machines to talk to the internet, such as cellular routers (devices that create an internet connection, similar to your home Wi-Fi router but for industrial use) and small, embeddable modules that other companies build directly into their own products. This segment also includes cloud-based software that helps customers manage all of their connected devices from a single dashboard. Customers are typically other businesses that need to add internet connectivity to their equipment.
IoT Solutions
This part of the company provides complete, ready-to-use packages of hardware and software for specific industries, representing about a quarter of the company's total revenue. A major offering here is SmartSense by Digi, which uses sensors to wirelessly monitor things like the temperature of food or medicine, and tracks employee tasks in restaurants, hospitals, and for delivery companies. Instead of just selling the parts, this segment sells a full service, often on a subscription basis. Customers pay for an ongoing solution to a specific business problem, like ensuring food safety or managing a mobile workforce.
What management is betting on now
The company is focused on increasing its Annual Recurring Revenue (ARR), which is the predictable income it gets from subscriptions and services each year. Instead of relying on one-time hardware sales, they are shifting to a subscription model where customers pay regularly for ongoing access to software and services. A key part of this strategy is buying other companies that already have strong subscription businesses, which helps Digi grow its recurring revenue faster. This provides a more stable and predictable stream of money for the company over the long term.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$25.49M
FY2025 Q1
$29.14M
FY2025 Q2
$25.73M
FY2025 Q3
$22.94M
FY2025 Q4
$27.52M
FY2026 Q1
$35.17M
FY2026 Q2
$40.84M
FY2026 Q3
$32.45M
Revenue
$138.67M
Net income
$15.74M
Diluted EPS
0.40
Operating cash flow
$33.31M
Free cash flow
$32.45M
Fetching…
Sources
Revenue
$130.74M
Net income
$11.30M
Diluted EPS
0.29
Operating cash flow
$41.48M
Free cash flow
$40.84M
Fetching…
Sources
Revenue
$122.46M
Net income
$11.71M
Diluted EPS
0.31
Operating cash flow
$35.63M
Free cash flow
$35.17M
Fetching…
Sources
Revenue
$114.34M
Net income
$9.98M
Diluted EPS
0.26
Operating cash flow
$28.00M
Free cash flow
$27.52M
Fetching…
Sources
Revenue
$107.51M
Net income
$10.24M
Diluted EPS
0.27
Operating cash flow
$23.95M
Free cash flow
$22.94M
Fetching…
Sources
Revenue
$104.50M
Net income
$10.50M
Diluted EPS
0.28
Operating cash flow
$26.29M
Free cash flow
$25.73M
Fetching…
Sources
Revenue
$103.87M
Net income
$10.08M
Diluted EPS
0.27
Operating cash flow
$29.72M
Free cash flow
$29.14M
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Sources
Revenue
$105.05M
Net income
$11.86M
Diluted EPS
0.32
Operating cash flow
$26.43M
Free cash flow
$25.49M
Fetching…
Sources
Is it cheap or expensive?
Fair value $105.99 vs current price $76.11
Wall Street consensus is the average analyst price target: $85.40 (-19.4% lower than our fair-value estimate).
Our most-likely fair value is $105.99 a share — about 39.3% away from today's price of $76.11, so the stock currently looks fairly priced.
Is it drowning in debt?
Healthy
Net debt $90.4M. Interest coverage 8.9x.
Net debt
$90.42M
Interest coverage
8.91x
Digi International Inc.'s profit covers its interest bill about 8.9 times over. which is stronger than every peer shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
DGII
BASELINE
Digi International Inc.
Total debt $118.39M Interest coverage 8.91x This is the baseline the peer rows are being compared against.
Total debt $8.29M Interest coverage -6.34x -100% vs DGII This peer has almost no interest-payment cushion compared with DGII.
Total debt $194.57M Interest coverage 4.64x -48% vs DGII Carries about 1.9x less debt cushion than DGII.
Total debt $1.34B Interest coverage 6.81x -24% vs DGII Carries about 1.3x less debt cushion than DGII.
Total debt $698.80M Interest coverage 2.78x -69% vs DGII Carries about 3.2x less debt cushion than DGII.
What you should know
The case for and against DGII
3 Rewards
1 Risk
Rewards
-
Revenue grew 17.7% last year.
-
Returns 7.5% on equity, ahead of 40% of its peers.
-
Free cash flow was positive in 9/10 years.
Risks
-
Stock trades 31.9% above its 5-year average P/E.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
60.40x
Forward P/E
24.30x
P/B
4.21x
P/S
5.71x
EV/EBITDA
25.52x
PEG ratio
0.98x
Profitability
How much profit each dollar creates
Gross margin
64.9%
Operating margin
16.5%
Net margin
9.6%
ROE
7.5%
ROA
5.2%
Health
Liquidity and balance-sheet strength
Debt / equity
0.17x
Current ratio
1.13x
Quick ratio
0.73x
Total debt
$118.39M
Total cash
$27.97M
Growth
How the business has been compounding
Revenue TTM
$506.21M
Revenue 5Y CAGR
8.7%
EPS TTM
1.26
EPS 5Y CAGR
26.0%
Cash flow
How much cash the business throws off
Operating CF TTM
$138.42M
Free CF TTM
$105.33M
FCF margin
20.8%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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